How to Start A Profitable Amazon FBA Business in 2018... Even If You Are Clueless! (Part 1/3)
Introduction
Just a few years ago, Amazon was just an online bookstore that prided itself on not carrying inventory of any sort. Fast-forward to these days, Jeff Bezos has turned it into the go-to place to buy anything you want, with hundreds of fulfillment centers and warehouses all over the world.
And as time goes by, things are starting to get a little bit crazy.
Back in the day, you had the ability to order a book online from your house. But now you can get anything you want, delivered right to your doorstep in a few days’ time. From the most expensive gadgets you can think of… to toilet paper.
The shopping game has changed forever. And I think that it will keep changing and evolving until the end of time!
Let me give you an example: A while back, Amazon started a program called Prime Now. How does it sound getting your stuff in 1 – 2 hours instead of days? Well, that’s exactly what they are doing: Cutting down delivery times and giving amazing customer service.
As a seller, sometimes I regret how Amazon spoils their customers, but that’s one of the reasons why people keep buying in there.
In the end, the customer is always right, and people love to be right, even if they’re wrong.
So, it's obvious that Amazon is growing by leaps and bounds. But according to the US Census Bureau and independent marketing agencies, they're just warming up.
According to Fig. 1, in 2017 US E-Commerce sales represented only 7 percent of retail sales and Amazon accounted for at least 50% of that, and judging by Amazon's actions:
- Leasing 20+ Boeing 767 Jets,
- Getting 1000+ Amazon Branded Trucks,
- And having established 100+ Fulfillment Centers in the US alone
… It wouldn’t surprise me that in a couple of decades from now (or maybe earlier), they take over the retailing industry altogether.
But To Keep Growing, They Need You!
I could go on and on, pulling up more figures and numbers to show you how great Amazon is and how much money they are going to make in the future, but honestly, who cares?
I’m sure you want to know, “Where’s your money?”… Right?
Listen to this: Amazon only accounted for 10% – 20% of total sales made on their platform in 2017 (as you can see in Fig. 2). To put this in another way, third-party sellers account for more than 80% of product sales all across the board.
That means that Amazon needs other sellers to make money. Amazon wants you… no, no, no... let me rephrase that… Amazon needs you to keep growing!
They have this huge supply chain, and they want you to make money out of it.
You’re being offered this huge opportunity on a silver platter. Amazon is putting their selling platform, their customers, their trust, their traffic, their payment processor, and their distribution network at your service.
You just need to find an awesome product to sell, and you’re in business, my friend. And the time to get started is now!
So, let me show you how you can be a part of this.
Opening Your Seller Central Account: Personal Plan
To start selling on Amazon, you have two options:
- Personal plan; or
- Professional plan.
Here’s a quick comparison of each:
But, as you don’t have a product to sell yet, I recommend you sign up for a personal account for now.
Just because it’s not worth paying their subscription fees if you’re not going to sell anything for a couple of months, right? Even when it’s less than 50 bucks.
And what you want to do now is to get familiar with your Seller Central dashboard, navigate through it, and finally access some of the documents that are only available for registered sellers.
So, for now just sign up for the personal account. When you are about to order your first shipment, you’ll upgrade it. Cool?
Chapter 1: The Lazy Man’s Way To Make 6 Figures A Year On Amazon.
Now that you know that you’re still on time to catch this wave, let me show you how you can make this work for you.
All you have to do is follow these 4 simple steps:
- Find a profitable product to sell
- Develop a unique selling proposition (using the simple method I’ll teach you in a sec)
- Place your first order
- Start selling on Amazon
That’s all there is to it.
And once you start getting a steady flow of sales, you can move on to the next product. Basically, you just need to rinse and repeat until you hit 5, 6 or 7 figures. It’s up to you!
Keep in mind that these four steps are easy-to-follow, simple and 100% outsource-able (of course, it all depends on what level of control of your business you feel comfortable with).
Best part? You don’t need a fortune to get started, and the reason for that is that we’re going to take calculated risks.
We’re going to follow the same strategy the best investors of the world use over and over to grow their fortunes.
You can get started with this business even if you only have to spare $500 or $1,000.
Also, be prepared to go “all in” when you see money is flowing your way, so you can make even more money, faster.
In the end, this business is all about ROI (Return On your Investment), so the more money you can put in, the more profits you’ll get in return.
Just to put things in perspective: Let’s say you invest $500 in your business, and you follow the 4 simple steps I’m about to show you. OK?
Well, on top of your initial investment of $500, you can easily make $500 in 3 – 6 months—that’s a 100% ROI!
If you reinvest that money, the same will happen. So, a year from now you could quadruple your investment.
How cool is that?
Of course, that’s just an example written on paper, and you can write anything on a piece of paper, right?
Your results will depend on how well you deploy this strategy I’m about to show you in this guide.
But if you follow it down to a “T,” I can promise you one thing: you’ll be well on your way to banking 6 figures a year or more. Cool?
Understanding Best Seller Ranking And Keyword Ranking.
Every best-selling product you find on Amazon has an evident pattern: A ridiculously low Best Seller Rank (BSR).
A low BSR ranking means you’re selling a ton of stuff, but let me explain myself:
All the products listed on Amazon’s catalog have a BSR. For instance, as you can see in Fig. 3, I picked one of the top products in the “Automotive” category, and this product has a BSR of 2, that’s ridiculously low!
A BSR lower than 100 usually means hundreds of items sold every day.
But it all depends on the category; for instance, a 100 BSR in Health and Personal Care means more products sold than a 100 BSR in Automotive.
Looking at a product’s BSR is pretty much how you find out which products are worth pursuing and which aren’t.
Of course, there’s more to it that just looking into that simple metric, but for now, it’ll do, because I don’t want to make this sound like rocket science.
So, what makes a product become a best seller in its category?
The short answer is sales: The more you sell, the higher BSR your product is going to have, and that’s why “sales” is the name of the game.
However, being a best seller in a category is not what you really want (unless you can sustain that Best Seller Rank long enough, and that could be very expensive).
And here’s when the “Keyword ranking” make its way to the mainstream.
Let me ask you something: If you want to buy a product on Amazon, what would you do?
Exactly!
You would just type whatever that is on Amazon’s search bar, just as I did in Fig. 4, and then you would browse through the products being offered and choose one of them, right?
I’ve got news for you: Most of Amazon’s customers act the exact same way.
And Best Seller Rank is not the same as Keyword Rank. I mean, they’re not intimately related.
And if you want to sell your stuff, you need to focus more on keyword ranking than on best-seller ranking.
So, it’s imperative that your product listing is shown on the first page of the main “keywords,” and if not on page 1 at least on page 2.
And by “keywords” I mean the natural words used in everyday language to find what you’re looking for exactly.
Now, if you’re looking for a “cheese grater,” there should be other keywords that are going to give you similar results, like:
- “Parmesan cheese grater”
- “Electric cheese grater”
- “Rotary cheese grater”
- Or better yet, “Grater for cheese”
But the most natural or common ways to call that stuff that you want (or that your customer wants) are the main keywords, and you definitely want to be ranked for those keywords.
Being ranked on page one for your main keywords will guarantee visits to your listing every day.
And if you do things right in terms of on-page optimization, you’ll get sales… More on that later.
And that’s the difference between Best Seller Rank and Keyword Rank. Got it?
Case Study: Reverse-Engineering A Best-Selling Product
Now, let me walk you through a simple case study so everything is crystal clear. Sounds good?
“How does my product become a best seller?”
That should be the question in mind right now.
And it’s pretty simple, let’s do some reverse engineering of one of the best sellers on Amazon, so you understand how it works.
You already know that the name of the game is “sales,” and I want to add a good dose of patience to that, because it won’t happen overnight, even if you have thousands of dollars to spend on marketing.
Let’s take the automotive category, and let’s drill down to the “Tools & Equipment” subcategory (if you want you can drill down another level, but for simplicity’s sake let’s just stop at this level).
And let’s pick the third one, for no particular reason.
These are characteristics of every best seller:
- It’s something that people want to spend their hard-earned dollars on.
- It also must do whatever the description says it does.
- Also, potential buyers would like to know if that product is the real deal or not, that’s why the best seller in any category often has more positive reviews that any of its competitors.
- Usually, it’s going to have very nice pictures and a really good product description.
- And more often than not, they’ve been selling on Amazon for a few months, and maybe years.
So, beating the best-selling product of any category is not an easy task, but it can be done.
There are a few more factors we need to analyze in order to decide if we should go after a product like this or not, and we are going to go over them later in this guide.
Now, take any best seller in any subcategory and you’ll see the exact same pattern.
Now, if you find a best seller that’s not doing some of the things I mentioned before and the ones I’m going to mention later, then that may mean that you have high potential to become the best seller in that category.
But hey, don’t rush it; there are a few more things we need to know before deciding what product to sell on Amazon.
And that’s what we’re going to discuss in a sec.
Chapter 2: One-Click Research: Clicking Your Way To Million-Dollar Products
Here’s the thing, unless you do your research you won’t find a profitable product.
I know, I know, research is boring and non-sexy to say the least, but we have to do it if we want to have a 6-figure a year business, OK?
The good news is that there’s a way to do all the heavy lifting with one click, and I’m going to show you how.
But first I’ll lay the foundations of the research process, so you understand what exactly is going on when you get your one-click results.
The Spreadsheet Method
Back in the “old days,” we needed to do research the hard way, and even after spending tens of hours doing this, we had no real clue if we picked the right product or not.
So it was some sort of a shot in the dark, but it was the best thing that could be done.
Still, the characteristics of a profitable product haven't changed since then, and they are:
- Lightweight and small
- Consistent stream of buyers
- Being able to sell it for 2-3 times as much as your buy price
- No “power sellers” in sight
- Low level of competition
Let me explain why these are the characteristics we’re looking for in a product to determine if it’s going to be profitable or not.
Lightweight and small: Amazon charges some fees to allow you to sell on their website. Even if you don’t use FBA, you need to pay a 15-percent selling fee, and if you use FBA, then you’ll need to pay a pick and pack fee, a weight handling fee, and an order fee.
So, the bigger and heavier a product is, the higher the fee you’ll have to pay.
On the other hand, remember that you need to get your product from the warehouse of your supplier to Amazon, so you’ll need to pay for shipping, and depending on the means of transportation of your choice (air or ocean for international shipping) the weight and the size will play a huge role in the cost of that shipping.
In Fig. 5, I chose one of the best sellers of the “Tools & Equipment” subcategory.
When I looked into it, this product was ranked 3 for that category, and it was a best seller.
Depending on the size and weight, Amazon is going to charge us the corresponding fees.
Based on that information, this product is considered a “Large Standard Size,” and it weighs 3.5 pounds, so here are the estimated fees this product should pay to Amazon:
Selling fee: 15% (As I’m writing this the price was $20) = $3
Order handling fee: $1
Pick and pack fee: $1.06
Weight handling: $2.73
Total fees: $7.73
So, in this case, Amazon’s cut is $7.73, and we need to add up our product cost and any other cost related to it to know what’s our profit margin exactly, but we’re going to talk specifically about that later.
The thing is that what you pay to Amazon depends on these two variables: Weight and dimensions.
In this link, you can learn more about the size of your product and the fees you’ll have to pay for FBA.**
**To be able to open this link, you’ll need to log in to your personal selling account.
A consistent stream of buyers: If something is considered a best seller, it means that it has a consistent stream of buyers.
But remember don’t let the BSR alone fool you, sometimes you need to take into account a few more things like how “seasonal” a product is or if it’s just a fad, in any of those cases a BSR may be inflated and make us decide wrong.
Still, BSR is a pretty good measure of the stream of buyers a product is getting.
But I’d suggest you use other tools like these websites to make sure you have the right product on target.
Both of them can give you some hints in regard to the behavior of the BSR of the product on target over time.
Being able to sell it for 2-3 times as much as your buy price: This is pretty straightforward. Basically, if you find something that sells on Amazon for $15, and you can get it for $5, then it’s a go.
But don’t forget to calculate FBA fees, shipping cost, and taxes, because they add up, and you can easily end up losing money.
No “power sellers” in sight: A power seller could be either an established brand who knows what they’re doing or an expert seller like me who started a while back, and that knows what they’re doing exactly.
To spot them you need to pay attention to the review count of their listings (they’re usually extremely high compared to the rest of the products selling on the same keyword), also to the pictures they’re using and the copy, if you find awesome pictures and even posters plus good copy then it may be a no-go.
On the other hand, if there are no power sellers in sight, your chances of making good money with that product increase tenfold.
Low level of competition: Finally, measuring competition level could be a pain, but a super simplified way to do this is by checking review count of the products being sold on page 1.
If the review count is less than 100, the competition level is low; if it’s between 500 and 1,000, it’s medium; and if it’s more than 1,000, it’s high.
You want to start with products that pop up along with similar products where the review count is low.
So basically, we need to create a spreadsheet where we can enter all these variables so that we can make an informed decision.
That spreadsheet should look like this:
What you see on Table 1 is not a real scenario of a particular product, but we can consider it as “a perfect scenario” where everything in there is giving us the green light.
But as you already know life is not perfect, let alone doing business on Amazon, so you may find yourself with different data when you build your spreadsheet.
The good news is that you’ll be in a better position to select your product doing this compared to selecting a product randomly.
The One-Click Method
A visionary entrepreneur, just like you and me, saw hundreds of struggling Amazon sellers doing the exact same thing when trying to find a product to sell.
He understood the pain and the grind and the hassle all of us, Amazon sellers, were feeling, and he came up with a one-click solution.
That one-click solution is called Jungle Scout, and it’s basically a web App and/or a Chrome extension that does all the heavy lifting and gives you very accurate results of what you need to make a smart decision.
Instead of spending hours glued to your computer and working days on end to finish that darn spreadsheet, you can get similar, and even better results with one click.
You can see in Fig. 7, it’s just a very small icon beside your URL bar, but this bad boy can pull up all the data you need in seconds.
Let me show you how it works:
I used “Fire Extinguisher” as the keyword, and after I pulled up the results of that search on Amazon, I clicked that little Jungle Scout icon, and then I got the results you see in Fig. 8.
So, let’s run an analysis of these results to see if this keyword is a good idea or not:
- Lightweight and small: As you can see in Fig. 8, there is a column called “Tier” and there we can see that this product is not small, on the contrary, it’s large and in some occasions considered small oversized. Because of dimensions, weight, and price, Amazon takes in a fee ranging from $7 to $24.
- A consistent stream of buyers: BSR or “Rank” goes from 31 to 40,000, so that means a small group of products is taking home most of the sales on this keyword.
- Being able to sell it for 2-3 times as much as your buy price: We need to do some research to find this out, but prices are not all on the low end, so you if you could find a product that cost you $7 – $15 you could make good money here.
- No “power sellers” in sight: I don’t see any, but I do see a brand that dominates the market. We may need to dig a little bit deeper to see if this product is worth pursuing or not.
- Low level of competition: Reviews go from 2 to 1,308, so competition level is high. But consider that only 2 products from the same manufacturer have reviews over 300.
As you can see this analysis is not black or white, and it doesn’t look at all like the “perfect scenario” we proposed above.
Now, in this case, what I would do instead of writing off this product right off the bat is to find a few more products and see how they look, so I’ll lean over the product that looks better compared to my other options.
What I like about this particular product is that there are not too many players in here, and sales per month in total are a big number, if we add up all the sales figures there, we’re looking at a $350k-per-month niche.
How cool is that?
Also, you’ll have to pay good money for FBA fees, but prices are not very low so if you could find a good product that cost you say $8 – $10 you could make some money here.
If you could capture 10% of that market and make 30% net profit, you can easily bank around $10k per month with one product.
Based on the level of competition, it’s going to cost quite a few marketing dollars to reach the same number of reviews (I’ll show you how to do this in the next chapters), but based on all I’ve said, it seems worth it.
Now, please, please, PLEASE, don’t do this product…
I’m telling you not to do this product because chances are that tens and even hundreds of other people who read the same pages will have had the same idea.
I’m just using this example to show you how the mechanics work. Now we’re ready to show you how to generate ideas for your products. Got it?
Brainstorming Ideas For Your Next Product.
Finding a product to sell could be challenging if you’re starting from scratch. That’s why I have a few recommendations for you.
One of the main things you could do is to start off making a list of your daily activities:
- What’s the first thing you do after you wake up?
- What happens next?
- And then what?
And so on and so forth until you hit the sack. Once you have listed out all your activities, think on the stuff that you need to perform those activities.
For instance, if you wake up in the morning and the first thing you do is go to the gym, what items do you use there?
It’s a very simple method, but it works like gangbusters.
Go try it. Make your list!
Another approach you could choose is to start thinking about the problems that you face on a daily basis and see if there’s something that you could buy to solve that problem.
Of course, the problems that you face may not be the same everyone and their brother face, but it’s a good way to build a list.
A third approach is to list your hobbies and the things you need for those hobbies. Again, we need to validate those ideas, but that’s how you do it.
A fourth approach is to go to the list of best sellers on Amazon and do in-depth research. Here’s the link to the Best Sellers on Amazon: http://www.amazon.com/Best-Sellers/zgbs
That last approach requires a very long process, but if all else fails, then that’s your next best option.
You can see in Fig. 9, best sellers are just one of the options you have, you could also go and browse “Hot new releases,” “Movers and shakers,” “Most wished for,” and “Gift Ideas.”
I’m sure that you’ll end up finding something using any (or all) of these approaches.
Once you have your list, the next thing you need to do is to narrow down that list to 5-10 products you’d like to sell on Amazon.
And then run the one-click or the spreadsheet analysis to all of them and find a winner or two.
If you have more than one product ideas, go with the ones with less competition and the product that’s cheaper to source. More on that in a sec.
Discovering Power Keywords
Before I go ahead and help you decide which product to start with, I want to give you one more resource.
This is about keywords, and keywords are really important when it comes to Amazon.
The reason why is this: People use natural language to find what they want, and if we want to sell something our product should show up when they type those keywords.
So, in order to discover your keywords, I have a couple of ways to do it:
Manually: Basically, you go to Amazon and start typing in the search bar your main keyword and Amazon is going to show you some recommendations. Something like this:
Another best practice is to take a look at what other sellers have in their product description, in this case, things like “aerosol,” “multipurpose,” “dry chemical,” etc.
The idea here is to find as many keywords related to your product, because those are ways that potential customers can find you, and we’ll use that information later.
Automated: There are a couple of web apps that can help you find keywords more easily than doing it manually:
- MerchantWords: There’s a free version and a paid version. In the free version, you can do three searches per day, and in the paid version, you have unlimited searches. MerchantWords allegedly measures traffic from Amazon, and even though I’m not sure about its accuracy, it can point you in the right direction and also give you more keyword ideas.
- AMZtracker: This web app works pretty well, and it gives you good keyword recommendations. They also estimate search volume but based on Google searches and not on Amazon searches.
And there are a few more out there, but they may not be worth the price, or may do the same as these two mentioned above.
Finding The Product You Must Sell
OK, here we are, we’re very close to deciding which product we’re going to sell on Amazon.
If you’re just reading and not taking action, I’d recommend you stop right here and get up to speed with everything we’ve gone through so far.
Make your list of activities, hobbies, problems, etc., and find 5-10 potential products, and then come back here.
Remember that the reason why you’re reading this is not pure amusement but to actually get on your way to 6 figures a year.
Now, if you’ve been working with me as you were reading this guide let’s keep going.
Let me propose a few scenarios and tell you what I’d do if presented with any of them.
Here we’re going to fill out a spreadsheet similar to the one I showed you at the beginning of this chapter.
But instead of products, we’re going to use the main keyword (the one with the highest search volume) and take the data from the three first products listed on page 1 and plug that into a spreadsheet ranges instead of given values.
For simplicity’s sake, let’s say we have the 3 products listed in Table 2 (Remember that you should have 5 – 10), also consider that I made up some of these numbers, so don’t base your decision on this table.
Anyways, if your spreadsheet looks something like this, your best choice should be “Bungee Cords” because:
- It has a decent total monthly revenue (remember you get that number by adding up all the Estimated Sales from Jungle Scout’s results page)
- Product is lightweight and small
- Review count is the lowest from all my product ideas.
- There are no power sellers in sight
- I can sell it for 3 times or more the buy price.
And that’s how you do it.
We’re almost there, buddy, so stay with me until the end, I promise it’ll be worth it.
Chapter 3: Easy Product Development Outsourcing: Hiring Dirt-Cheap But Hard-Working Outsourcers To Do The Heavy Lifting.
Product development can be tricky.
I mean, by now you know what product to sell, but you don’t really know what to sell.
One of the biggest mistakes newbie-sellers make is to offer the exact same product that’s already being sold on Amazon, call it whatever you want: laziness, lack of common sense, but that’s not a practice you should follow if you really want to have a 6-figure-per-year business.
You have to create a better or at least a different product from what’s already being offered.
Ask yourself this: Why would any potential customer pay attention to you?
They can find the exact same thing from another seller that’s been successfully selling it for months and even years. Get it?
So, how do we go about developing that unique or differentiated product people want to buy?
Don’t worry; it’s actually simpler than it sounds, and in this chapter, I’m going to address to that question, show you the process step-by-step and also give you the tools to outsource this part of the process altogether.
What Makes People Buy On Amazon?
Some people say that it is the copy on the page; other people say that it’s the pictures, but you and I know that it’s the reviews. You can find some good examples of products with OK pictures and no copy at all, but great reviews that are selling like hotcakes.
Don’t get me wrong, good copy and good pictures help a lot with your conversions but what really makes people buy on Amazon is the social proof that your product is the real deal.
The good news is that reviews are not only useful for buyers to make better purchase decisions but for us sellers to make better product development decisions.
By reading through reviews, you can instantly understand what your potential customers really want and give them exactly that.
In the past, blue chip companies paid top dollar for research; they used surveys, ethnography, and other expensive methods to extract information from consumers.
But now, you only need to head to Amazon, read reviews, and voila!
Product Development Process: Done-For-You Guide (for your outsourcer).
Like I said before product development can be tricky, and time-consuming as well.
Imagine reading through 500 reviews, that’s going to take a few hours of your time, not to mention the time you’ll need to analyze and organize your findings.
Fortunately, I have a pretty cool solution for that, and it’s called outsourcing.
I have prepared a full-blown video that you can hand to your outsourcer, so he/she can take care of the heavy lifting, saving you lots of time. And I share it with my inner circle of coaching students.
Of course, you can give this process a try to for your first product, in fact, I recommend you do it yourself the first time, even if it takes some hours of your time because you’ll understand the process and know what you want your outsourcer to do.
In a nutshell, what we’re going to do here is something I call the “SIWI” analysis, which stands for Strengths, Improvements, Weaknesses, and Ideas for the copy.
And if it sounds similar to SWOT analysis for strategic planning it is because it’s pretty much the same but with a small twist to suit our purpose.
The process is laid out step-by-step in the video, but you basically just need to read through the reviews of your first three main competitors.
Then you copy and paste (and this is really important) phrases, lines, and even complete paragraphs of those reviews.
The reason why we copy and paste reviews, is simply because we want to capture customers’ language, understand their problems and frustrations and that our potential customers feel like we really understand them when we talk to them using their language.
Hope it makes sense.
And that’s really the secret of the best copywriters in the world; you talk to your target audience in their language.
I mean, you can throw one “power word” or two, like “Dramatically increase…” or “Skyrocket your…” but what’s going to make a customer buy is the language you use. But that’s something we’ll expand on that later.
The underlying idea of the SIWI analysis is that you understand what your potential customers like about the current products offered, what they hate about them, and how they can be improved.
So, with that list of features, you are ready to talk to your supplier and ask for a quote to create your “perfect product.”
Finding An Outsourcer
Doing this process by yourself once is OK, you’re not going to die, I promise!
But doing it over and over and over is really annoying. I can tell you from experience because I’ve repeated this process at least 10 times.
It’s worth it, but once you know how it goes, and your business is growing you can allocate that time to more profitable tasks.
So, it’s always good to keep in mind that we’re creating a system here, that’s going to free up our time.
It’s not like you’re getting a new job as the general manager of your company, no, I want to show you how to take yourself out of your business as soon as possible.
And the best way to do this is by using technology and hiring people.
Having a 5-figure-a-year business on your own is 100% possible, but a 6-figure or a 7-figure business is not if you try to do this by yourself.
If you want to grow to the 6-figure level, you need other people working for you.
So, we’re going to start hiring inexpensive labor to do some annoying and boring little tasks at first, and then when you feel the moment is right, you can hire more sophisticated employees for your business. All right?
The first question you may have in regard to outsourcing is, “Where do I find those inexpensive hard-working individuals?”
And the answer is that you have 2 options (as far as I know)…
- Option 1: Upwork (https://www.upwork.com/)
What I like about this website is that you only pay for verified time spent working for you.
They have a cool software program that allows you to see your employee’s keyboard and mouse activity, and feedback, as well as recording and screenshots of their computer to make them more accountable.
You don’t have to pay anything, but the employee pays 10% to them to get the contract.
- Option 2: Online Jobs Philippines http://www.onlinejobs.ph/
Option 2 is my favorite because it’s a website that connects you directly with Filipino outsourcers, and you can really find affordable rates here, something like $2 to $5 per hour.
The only downside is that they don’t have software to hold your worker accountable, but that can be fixed.
You just need to post a job, get some candidates, pick one, and get started. The whole process is a little bit more complex than that, but in a nutshell, that’s how it works.
In the following pages, I’ll give you some ideas for how to get the most bang for your buck when hiring an outsourcer.
Hiring, Controlling, And Paying Your Outsourcer
Hiring.
No matter if you use Upwork or Online Jobs Philippines, the first thing you need to do to hire an outsourcer is to post a job, and it’ll look something like this:
We are looking for a Virtual Assistant to help us on an online research project. The ideal candidate will be computer savvy with a keen eye for detail.
The company will rely on you for having accurate and updated data that are easily accessible through shared files.
Responsibilities:
Transfer data from online websites into spreadsheets or another word-processing format
Create files without mistakes
Verify data by comparing it to source documents
Update existing data
Sort and organize information after entering data
Requirements:
Proven experience as virtual assistant
Excellent knowledge of word processing tools and spreadsheets (MS Office Word, Excel, etc.)
Good command of English both oral and written and customer service skills
Great attention to detail
High school degree or equivalent
You choose your favorite platform, post the job, and wait for applicants.
Instead of going ahead and hiring people based on their resumes, I recommend hiring the ones you think are best, but give them a small task to see how they do it, and if you like their work, then hire them for a month or two.
Once they gain your trust, you can assign more responsibilities and tasks.
And just between you and me, even when these rates look dirt-cheap, they’ll be very grateful to you for hiring them.
Controlling
If you’re paying by the hour, you want to make sure your outsourcer is not watching YouTube videos in your paid time, right?
Upwork has built-in software that helps you check-up on your outsourcer’s daily activities.
But in case you want to work with Online Jobs Philippines, there’s a very neat solution, and it’s called Time Doctor.
It tells you exactly when your employee has been working for you and takes shots of their screen. In the paid version, which is only $9.99 per month, it also gives you some pretty useful reports. It does also come in a free version with limited features.
But trust me, you can’t afford hiring outsourcers without this.
Paying
Online Jobs Philippines have a pretty cool alternative payment method called “EasyPay.”
They don't charge you or your workers any fees, and it takes 1 week to get set up the first time.
Just know that it's only available for US and Canada and your outsourcer needs to live in the Philippines.
In any other case, PayPal is the way to go to pay your outsourcers.
PayPal is safe and gives you some level of peace of mind that you won’t get scammed.
Depending on your project and the lifespan of the contract, you could decide to pay daily or weekly.
I’d say weekly is the best choice.
You pay once they have done the work, and you’ll have a committed worker waiting for his weekly paycheck.
Should You Give Your Outsourcers A Raise?
You can’t prevent this from happening, so I want to give you a heads up and few ideas on how you can deal with it.
When to grant a raise and how much should it be are challenging questions to answer.
Keep in mind that the cost of living in the Philippines is far lower than it is in the US.
Just to give you an idea, Engineers and professors make $300–$400 a month for 40 hours per week.
So, plan on paying them a little less than they are asking, even if it makes you feel a little mean, and this is why:
The Thirteen-Month
In the Philippines, there is a law that requires employers to pay employees an additional month’s pay after they have been with the organization for one year.
You will pay this to your Filipino VA in December.
If your VA has not been with you a full year once December rolls around, you will prorate the Thirteenth Month pay appropriately.
So, on top of the salary, you agree you’ll need to pay this to your outsourcer.
Best Practices When Giving A Raise
When it comes to giving a raise, you can give a raise after the “probation period,” which is usually from 30–90 days.
But hey, you don’t need to give them a raise after that period; it’s up to you.
One of the best practices that I myself preach is to pay based on results.
And I’m not talking about a raise here. I’m talking about a performance bonus, which depends on how well they do their job.
Hope this gives you some ideas on what to do when your outsourcer asks for a raise. If you’re ready, let’s move on to the next subject.
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